New Products/Services and Higher Online Ad Spend to Help Marketers Grow Revenue

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Just when we thought the economy was improving, marketers are signaling a cautious outlook. The turmoil in the financial markets and lower consumer confidence levels have many marketers indicating less optimism. To combat a potential drop in revenue, these business leaders are modifying their marketing approach and expenditure levels.

The latest CMO survey finds that only 52.2% of marketers feel optimistic about the economy while 63.3% felt that way earlier this year. In addition, fewer business leaders expect consumers to increase their purchasing volume for the rest of 2011.  More marketers (+9.7%) believe consumers will be heavily focused on price for the next 12 months. At the same time, businesses also say consumers will care less about innovation or service.

To improve the business picture, marketers will skip the intermediaries and begin selling directly to consumers – the number planning to do so jumped from 21.6% in February 2011 to 32.9% in August. Proof of this trend can be found in the percentage of business revenue being reported through the online channel. For surveyed firms, that number now stands at 11.2%.

To grow Internet sales, firms will need to boost their online budgets. The CMO survey data shows that companies with Internet channel sales exceeding 10% of total revenue plan to spend 21.8% more on marketing budgets for the rest of this year.

For many marketers, the need to generate higher sales during the potential upcoming economic contraction means focusing on selling something new. The survey reveals marketing expenditures will emphasize:

  • New product introductions: 10.4%
  • New service introductions: 6.6%

These numbers are both higher than they were earlier this year. And marketers plan to cut spending on customer relationship management and brand building, perhaps because they believe that price is king for the typical shopper these days.

Businesses report some variation in marketing budgets as a percentage of revenue, by economic sector, as follows:

  • B2B product 7.0%
  • B2B services 11.1%
  • B2C product 11.6%
  • B2C services 12.1%

While marketers are clearly nervous, Christine Moorman, director of the survey, sees reason for optimism. Moorman notes, "These same executives are reporting positive performance gains and are spending despite the negative news. I conclude that these sources closer to company operations, especially in revenue and demand-generating activities like marketing, are trying to tell us that market reactions over the past month may be grossly exaggerated.”

[Source: Moorman, Christine. Highlights and Insights. The CMOSurvey​.org. August 2011. Web. 8 Sept. 2011]
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-owner of several small businesses in the health care services sector.
September 7, 2011 Media Usage Tags: , ,